Deloitte Touche Tohmatsu Limited Firms Governance Model

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Table of Contents

Brief Company Description
Governance Model
Ownership Structure of the Company
Structure of Board of Directors
How to Resolve Conflict of Interest Between Stakeholders
Purpose of the Company
Rationale for the Selection of This Governance Model
References

Brief Company Description

Deloitte Touche Tohmatsu Limited is a multinational corporation providing financial and risk advisory services as well as management consulting, audit, tax, and legal support for various business ventures. The headquarters of the company is located in London, UK, with numerous offices around the world (Omondi, 2019). The main objective of Deloitte is to make an impact that matters and help their clients and personnel excel (About Deloitte, 2021, para. 1). As a company working within the financial services industry, Deloitte offers audit and assurance and consulting services to public and private companies. The company provides services to over 90% of businesses on the Fortune 500 list and thousands of other private organizations (About Deloitte, 2021). In addition, it currently employs over 345,000 specialists in management consulting, financial services, and legal aid (About Deloitte, 2021). Thus, Deloitte is one of the largest professional services companies in the world.

Governance Model

The Deloitte Global Board of Directors is an example of a governing board. The governing board model incorporates the supervisory and management functions of the board of directors (Governance model in the world, 2021). In addition, such models make provisions for the CEO of the company to be a member of the board of directors as the person responsible for the majority of managerial decisions (Governance model in the world, 2021). For example, the Deloitte Global CEO, Punit Renjen, also serves as a member of the companys board of directors (Deloitte global board of directors, 2021). Thus, the Deloitte board of directors is responsible for the oversight and governance of the business.

Ownership Structure of the Company

Deloitte is a privately owned venture with numerous member firms in over 150 countries. It should be noted that Deloitte firms are not branch offices of the parent company but separate entities owned by different individuals (2021 global impact report, 2021). Thus, the ownership structures of each of the Deloitte firms across the globe may differ from each other. The ownership function of the parent company based in the UK is performed by shareholders and investors (Governance model in the world, 2021). As there is no single controlling owner of Deloitte, it can be argued that the company is an example of a dispersed share-ownership model (Governance model in the world, 2021). The absence of a controlling owner or group of owners does not prevent the board of directors from performing the management function, as engaged investors are welcomed on the board.

Structure of Board of Directors

Deloitte Global has a one-tier structure of the board of directors. Thus, the companys board consists of both executive and non-executive directors (Governance model in the world, 2021). Currently, Deloittes global board of directors comprises 21 members, with the CEO Punit Renjen being the only executive director (Deloitte global board of directors, 2021). Therefore, 20 of the directors on the board are non-executive and are not involved in the company management. The organization does not have independent directors on the board. However, the CEO and the global board of directors are advised by the Deloitte Global Independent Non-Executive (INE) Advisory Council (Deloitte global board of directors, 2021). The council members do not hold the same power as the board directors. It should also be noted that Deloitte has several committees under the board, including compensation, succession planning, and risk and ethics committees (Deloitte global board of directors, 2021). Thus, the company can serve as an example of a one-tier board of directors structure.

How to Resolve Conflict of Interest Between Stakeholders

The companys leadership and management often face conflict with the main stakeholders, including shareholders. These conflicts stem primarily from different needs of the parties as shareholders aim to increase shares value and total shareholders return (TSR), while the management team strives for the prestige of the company and value preservation of human resources (Governance model in the world, 2021). Two approaches can be utilized to resolve conflicts between different stakeholders. Thus, the company can implement a control-based approach built on internal control management. In this approach, the board of directors plays a central role. It aims to increase a companys efficiency through the establishment of rules of conduct and financial incentives (Governance model in the world, 2021). Meanwhile, the trust-based approach is founded on the motivation theory and promotes behavior within the company based on norms, context, and ethics (Governance model in the world, 2021). As the latter approach is rarely implemented in for-profit business ventures, it can be argued that Deloitte relies on the control-based approach for conflict resolution.

Purpose of the Company

Purpose-oriented governance is an efficient way of leading a company. According to Strandberg (2020), the corporate purpose should be set by the board of directors, and they should set the tone for delivering on purpose, including addressing the values and practices of the company (para. 6). Thus, the companys purpose can be financial and lie in the maximization of revenue or a social one that promotes social responsibility and fosters social relationships (Governance model in the world, 2021). The purpose of the Deloitte venture is reflected in its mission statement of helping its customers and employees achieve excellence (About Deloitte, 2021). Thus, a company can be defined as one having a social purpose.

Rationale for the Selection of This Governance Model

Deloittes governance is based on a one-tier governing board model with supervisory and management functions. This governance model was selected for discussion as it is a standard model for developed countries and allows us to see how such companies operate. In addition, the model illustrates the relationship between the board of directors and the shareholders in cases when there is no one single controlling shareholder or controlling group (Governance model in the world, 2021). As dispersed shareholders do not control the board, the boards primary purpose is to enhance shareholders value (Governance model in the world, 2021). As a venture with a social purpose, Deloitte illustrates how it can be used to increase revenue while catering to customers, employees, and shareholders.

References

2021 global impact report. (2021). Deloitte.

About Deloitte. (2021). Deloitte. Web.

Deloitte global board of directors. (2021). Deloitte. Web.

Governance model in the world [Power Point]. (2021).

Omondi, S. (2019). Where is the headquarters of Deloitte?. WorldAtlas. Web.

Strandberg, C. (2020). Purpose governance: A new role for boards. Sustainable Brands. Web.

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